A Texas farmer expects have 20,000 bushels of wheat. The wheat will harvest in late September. On 15 July, the wheat is prices at $160 per bushel. He expects that the price of wheat may fall below the market price of $160 per bu His friend recommends him to hedge his position by selling September wheat futures. The price of wheat future is $157 per bushel. The price fall to $150 per bushel when September month end approached. Calculate the value of hedge position. The value of hedge position is $157per bushel The value of hedge position is $307 per bushel. The value of hedge position is $14.30 per bushel. The hedge position is $150 per bushel.
A Texas farmer expects have 20,000 bushels of wheat. The wheat will harvest in late September. On 15 July, the wheat is prices at $160 per bushel. He expects that the price of wheat may fall below the market price of $160 per bu His friend recommends him to hedge his position by selling September wheat futures. The price of wheat future is $157 per bushel. The price fall to $150 per bushel when September month end approached. Calculate the value of hedge position. The value of hedge position is $157per bushel The value of hedge position is $307 per bushel. The value of hedge position is $14.30 per bushel. The hedge position is $150 per bushel.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
12)
Transcribed Image Text:A Texas farmer expects have 20,000 bushels of wheat. The wheat will harvest in late September. On 15 July, the wheat is prices at $160 per bushel. He expects that the price of wheat may fall below the market price of $160 per bu
His friend recommends him to hedge his position by selling September wheat futures. The price of wheat future is $157 per bushel. The price fall to $150 per bushel when September month end approached.
Calculate the value of hedge position.
The value of hedge position is $157per bushel
The value of hedge position is $307 per bushel.
The value of hedge position is $14.30 per bushel.
The
hedge position is $150 per bushel.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education